Shelly Ibach, Sleep Number Corp. president, CEO
Total compensation: $4,195,630 for the year ended Dec. 31, 2017
Nonequity incentive pay: $1,137,400
Other compensation: $30,363
Exercised stock options: $330,275
Value realized on vesting shares: $1,855,669
New stock options: 53,720
CEO Pay ratio: 140:1
Median employee pay: $52,130
Total 2017 shareholder return: 66.2 percent
Note: It was a busy year for Sleep Number with the launch of a new product line, a corporate name change and a move to new headquarters in downtown Minneapolis.
Ibach’s realized compensation for the year rose 167 percent from 2016’s total of $1.6 million, thanks mainly to the annual cash incentive pay of $1.1 million earned when the company delivered revenue and profit growth above plan for the year.
Previously issued performance-based long-term equity awards also paid out for the 2015-2017 performance period at 86 percent of the target. The company had above-target revenue growth for the period but underperformed net operating profit targets as it made significant investments to company deemed essential to achieve its long-term strategy.
Ibach and other executives also received a special one-time grant of performance-based restricted stock units in March 2017 that will only vest if Sleep Number’s diluted net income per share meets an aggressive target by Dec. 28, 2019. The compensation committee, chaired by Brenda Lauderback, made the award “to create alignment with the long-term goal we have communicated to shareholders, and to ensure that we are appropriately rewarding our senior leaders for achievement of the aggressive long-term plan to achieve EPS of $2.75 by 2019.”
It is essentially an all-or-nothing award, there is no sliding scale based on performance. Executives won’t realize anything from the special award if Sleep Number does not hit the $2.75 per-share target. Sleep Number finished 2016 with earnings per share of $1.10 and 2017 at $1.55 per share.
The grant-date value of that award to Ibach was $3.1 million, and the Star Tribune will count that as compensation in 2020 if the company achieves that EPS target in 2019. The value is included in the proxy’s summary compensation table and the newly disclosed CEO pay ratio of 140:1 was based on a total compensation figure that includes the value of that special award. The company points out in the proxy if that special $3.1 million performance-based stock award had not been granted, the CEO pay ratio would have been 80:1.